Report: Owning a home here is still affordable

Houston is just one of five major cities in the U.S. where the cost of owning a house is still considered to be affordable by traditional standards, according to recent data.

In Harris County, homeownership expenses -- mortgage payment, homeowners insurance, mortgage insurance and property taxes -- are about 25% of the average income before taxes, according to a third-quarter U.S. Home Affordability Report by property data firm Attom. Personal finance experts have long considered 28% to be the limit of affordability for most borrowers.

Attom's calculation used the median price of a home or condo in Harris County ($318,750), an average income of $85,800 and a 20% down payment.

Among U.S. counties with populations over 1 million, the only others where the ratio was less than 28% are those that include Detroit (17%), Philadelphia (20.7%), Cleveland (21.1%) and Pittsburgh (22.3 %). In Texas, the only "affordable" counties are those that include the cities of Midland, Beaumont and Amarillo. The study included counties with a population of 100,000 or more and 50 or more sales in the third quarter.

Nationally, as mortgage rates eased, buying a home took a smaller chunk of the paycheck but still far exceeded the traditional measure of affordability, falling 1.2 percentage points from the second quarter to 33.5% in the third. That translates to $2,045 a month based on an average wage of $73,164.

The home cost debt-to-income ratio is 12 percentage points higher than the recent low of 21.3% in the first quarter of 2021 just before mortgage rates began their rapid ascent, according to Attom.

"Home affordability continues to show signs of easing, which lightens the pressure on house hunters struggling to find a place that fits their budget," Attom CEO Rob Barber said in an announcement. "The cost of owning a home across much of the nation remains a tough go for average workers, exceeding levels preferred by banks and other lenders. But it is at least tracking in the right direction. That's mainly because of declining interest rates."

In Travis County, home to Austin, homes continue to be difficult to afford, with the average debt-to-income ratio of 38.5% in the third quarter, down from 45.3% in the second quarter, according to Attom.

Buying a home remained a challenge for average workers around the nation with almost all counties remaining less affordable in the third quarter than compared to their historic averages, according to the report. The affordability index improved from 73 in the second quarter to 75 in the third quarter, according to Attom. Anything under 100 is less affordable than the historic average.

Harris County's affordability index was up 3% from the second quarter and 11% compared to the third quarter of 2023, according to Attom. Home prices in Harris County were up 2.9% over the year in the third quarter, while wages rose 2.7% during the period.